Is Now the Time to Buy Multifamily? Inside the DFW Market Reset

After years of a punishing correction, is the DFW multifamily market finally turning? On this episode of the Old Capital Real Estate Investing Podcast, host Paul Peebles sits down with co-host and active apartment buyer Michael Becker, Old Capital's own James Eng, and one of Dallas-Fort Worth's top investment sales brokers, Mark Allen of Colliers, to get two very different perspectives on where the market stands right now: the buyer's and the broker's.

Here's what they're seeing on the ground.

The market has entered a "resolution phase"
Mark Allen has spent the last decade brokering multifamily deals in DFW, one of the highest-velocity markets in the country. But the type of deal trading has shifted dramatically.

"Last year roughly about 60% of the trades were in the upper end of the quality spectrum," Mark explained. This year, it's flipped: nearly 60% of sales have been pre-1990s properties, workforce housing, short sales, and lender-owned assets.

"I look at this as really the resolution phase of the market," he said. "We're starting to resolve a lot of this distress."

The foreclosure numbers tell the story. In 2024, DFW saw roughly 10 multifamily foreclosures. Last year, that jumped to about 50. This year, the market is on pace for roughly 90 foreclosures, and it may accelerate.

Prices have reset, hard
The clearest sign of the reset is in pricing. Older workforce properties that once traded at $120,000 to $200,000 per unit are now, in many cases, selling for under $100,000 a unit. A 450-unit deal that once commanded a premium might now be a $30 million deal.

Michael Becker put the reset in the most striking terms possible. He's currently under contract on a North Austin property for less than the seller paid for it more than a decade ago, despite the area's population growing nearly 50% in that time.

"We're literally in contract to buy a deal for less than it was for 10 years ago, and that's shocking to see," Becker said. He's been calling it "The Lost Decade" in his quarterly newsletter.

In some cases, buyers can now purchase deals for 10-20% (or more) below not just what the owner paid, but below the lender's debt basis.

Why "surety of close" now beats price
In a choppy market, sellers care about one thing more than the highest offer: certainty that the deal will actually close.

"Surety of close is key in today's market, and so we're pushing that more so than ever," Mark said. "Not price, surety of close."

That's why local, proven buyers are winning deals over out-of-state "high flyers" who bid aggressively but may not have the equity to follow through. As Mark put it, taking a high-flyer off market often ends with the deal getting retraded or falling apart entirely.

The fundamentals are quietly firming
While the headlines focus on distress, Becker says the underlying fundamentals are the healthiest they've been in years. Across his portfolio of roughly 5,000 units in DFW, occupancy is strong.

"We're at the best spot from a portfolio-wide metric from the standpoint of occupancy, renewals, [that we've] been since probably the very beginning of 2023," he said. "We're 95% on average in DFW."

His secret? Meet the market. "Those of us willing to meet the market are able to meet the market," he said. The properties that aren't full, he noted, usually have an ownership or capital problem, not a demand problem.

Becker is optimistic about what's next: he expects Dallas to print positive rent growth in Q4 and Q1, and once two consecutive quarters show up in the data around April 2027, he believes capital will start flooding back, first into the best locations and quality, then filtering down.

Lenders are finally taking the hit
One of the biggest changes in this cycle: lenders are recognizing losses.

James Eng noted that on many distressed deals, lenders are taking discounted payoffs, sometimes 10-15% off the balance, sometimes 30-40%, and in cases involving fraud, even more than 50% off the loan.

In some situations, lenders are simply stepping aside. "Well, I'm not taking over this deal. Just bring in somebody new. And we're not financing it either," James said, describing the lender's mindset.

He even pointed to something he'd never seen before: deals where the owner pays the buyer to assume the loan, because the property is now worth less than the loan amount and selling outright would trigger a costly prepayment penalty. "That I've never seen in my career," James said.

How buyers are underwriting deals right now
So how are the buyers who are active pricing these deals? It depends on the buyer, Mark explained. Syndicators tend to be driven by leveraged returns, while many high-net-worth buyers keep it simple: a stabilized, unlevered yield on cost, often targeting around 150 basis points over what they consider the market cap rate.

For example, if the market cap rate for an 80s-vintage deal is around 6%, a buyer might underwrite to stabilize at a 7.5% yield on cost, after all their closing and renovation costs. Others are focused on stabilized cash-on-cash returns, or whether they can refinance and pull most of their equity back out at a 1.25 debt service coverage ratio.

The hard-won lesson: take your chips off the table
If there's one lesson from the last few years, it's about knowing when to sell.

"It's always easy with hindsight. You should have sold it all with hindsight, but you just never know exactly where it's going to go or how deep," Becker admitted, noting one deal he wishes he'd sold still "haunts me to this day."

His takeaway for operators: if your plan is to buy, renovate, and improve value, the end of that story should be to sell or refinance into long-term fixed-rate debt, not sit in an in-between debt structure. (As he noted, that 10-year fixed-rate agency loan is something Old Capital can help arrange.)

Tips for buyers and sellers
Mark closed with practical advice for both sides of the table:

For sellers: Vet your buyers. Make the transactional reference calls, and lean on your broker to relay how a buyer behaved on tours and in negotiations. That information is critical to picking a buyer who will actually close.

For buyers: Location is everything, and stay capitalized.

"Location is key," Mark said. "Obviously, I think you can make money in any kind of market, but if you're going into a rough, tough market that has heavy density of apartment communities, just make sure you have enough capital on hand to weather any storms." Being over-capitalized, he added, beats being under-capitalized every time.

Key Takeaways

• The market is in a "resolution phase", distress is clearing, with DFW foreclosures on pace for ~90 this year.

• Prices have reset hard, some deals are selling below their value from a decade ago, and even below the lender's debt basis.

• Surety of close beats price, sellers favor buyers who can actually close

• Fundamentals are firming, Becker's DFW portfolio is 95% occupied, the strongest since early 2023.

• Lenders are recognizing losses, discounted payoffs of 15-40%+ are becoming common.

• This may be the window, distressed pricing plus firming fundamentals is a rare combination.

Becker's bottom line
For those still waiting on the sidelines, Becker didn't mince words: "What are you waiting for? Now's the time... you're going to miss the train."

His verdict on the market?

"It's 2016 all over again... I could not be more bullish. Ring the bell at the bottom. It's go time."

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Want the full conversation? Listen to Episode 348 of the Old Capital Real Estate Investing Podcast for the complete breakdown from Michael Becker, Mark Allen, and James Eng.

Thinking about financing your next multifamily deal? The Old Capital team can help you size it up. Reach out at oldcapitallending.com